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Fracas in Caracas
Venezuela Burns as Court Entrenches Gridlock

The Venezuelan Supreme Court late this week ruled in favor of the country’s President, Nicolas Maduro, in his dispute with Venezuela’s National Assembly over a move Maduro made last month to increase his control of the country’s finances and economy. The WSJ:

At issue was an executive decree by Mr. Maduro in early January that gave him broader powers over the economy, which is suffering its deepest collapse since the Great Depression. But the new assembly, dominated by the opposition after December mid-term elections, rejected the decree.

Both Mr. Maduro and his predecessor, Hugo Chavez, had packed the court with government allies who have long supported the leftist administration in their rulings, and the court sided with Mr. Maduro.

Mr. Maduro said he can now enact a series of measures to deal with the country’s severe crisis. “This really helps our work,” he said on state television.

Yes, this indeed helps Maduro in his ongoing project to completely destroy his country. For a sense of the kind of hole Venezuela finds itself in, look no further than this piece from the Financial Times, which lays out the case that Venezuela is overwhelmingly likely to default this year if oil prices remain depressed:

If Venezuelan oil prices remain at current levels of about $25 a barrel, the country’s export revenues will fall to $22bn, according to BofA calculations. Minus bond payments, that would leave about $12bn to pay for imports — less than a third of last year’s import bill. On top of that Venezuela has to repay $6.2bn of loans to China.

Unless something is done, Mr [Francisco] Rodríguez [of Bank of America] warns, the scarcity of basic goods will drastically worsen and fuel “major social tensions”.

In the latest blow to suffering consumers, shopping centres have begun cutting their opening hours due to electricity rationing.

Later this month Venezuela must make a $2.4bn bond payment. The government has been raiding its dwindling foreign reserves, which now stand at $15.4bn. That is almost half those of Argentina, which is already in default but appears to be attempting a return to economic normalcy.

Meanwhile, for many ordinary Venezuelans, life has become very grim, as the WSJ reports in a separate piece on the situation in the country:

In a hospital in the far west of this beleaguered country, the economic crisis took a grim toll in the past week: Six infants died because there wasn’t enough medicine or functioning respirators. […]

Rosalba Castellano, 74 years old, spent hours this week in what has become a desperate routine for millions: waiting in long lines to buy whatever food is available. She walked away with just two liters of cooking oil.

“I hoped to buy toilet paper, rice, pasta,” she said. “But you can’t find them.” Her only choice will be to hunt for the goods at marked-up prices on the black market. The government, she said, “is putting us through savage suffering.”

The National Assembly, now controlled by the opposition, declared a food emergency on Thursday—an attempt to spur the government of President Nicolás Maduro to, among other things, ease price controls that have created shortages of everything from medicine to meat.

“The people are being left without the ability to feed themselves,” said lawmaker Omar Barboza.

Inflation in this oil-rich country is expected to hit a world’s-worst 700% this year, according to the International Monetary Fund. The economy shrank by 10% last year and is expected to decline another 8% this year, according to the IMF, the worst performance in the world. And there is no end in sight.

On Friday, the opposition’s leader Henry Ramos announced that he would announce concrete steps for setting up a referendum to remove the “national disgrace that is the government” in the coming days. The opposition had previously said that it planned to call a referendum within six months, but on Friday Ramos said that six months would clearly be too long. Maduro told his supporters “not to underestimate the threats Henry Ramos made today against peace and stability of the Republic.” No one should underestimate the chances for political violence erupting in the coming weeks and months.

 

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